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Continue reading: Markets Live: Tuesday, 18th June 2019

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Prepaid card transactions will hit $396 billion by 2022 — and new players like Apple, Amazon, and Venmo are trying to gain share

Tue, 06/18/2019 - 2:02am  |  Clusterstock

This is a preview of a research report from Business Insider Intelligence, Business Insider's premium research service. To learn more about Business Insider Intelligence, click here.

The US prepaid card ecosystem is huge, with 10.7 billion prepaid card transactions made in 2016 reaching $290 billion. And it’s shifting focus from low-income, un- and underbanked consumers toward millennials and higher-income adults.

But as the market evolves, legacy prepaid issuers, like Green Dot, are under threat. The market is becoming more competitive as tech companies like Apple, Square, and Venmo develop their own prepaid offerings, likely as part of a push to drive customers to engage with their core peer-to-peer (P2P) transfer or digital wallet apps. These players’ robust digital offerings and ability to offer prepaid services for lower, or no fees are undercutting legacy businesses. And on top of crowding, the Consumer Financial Protection Bureau (CFPB) is implementing regulations next year that could impact some issuers’ monetization strategies.

As a result, the US prepaid card market is becoming an increasingly complicated space for issuers to navigate, so prepaid issuers need to rethink their strategies to best attract consumers. Companies can attract a bigger user base if they target younger users from both low-income and high-income segments. They should also provide convenient offerings, that integrate digital features to make account information accessible, to cater to young consumers’ preferences.

Business Insider Intelligence has put together a detailed report that explores the evolving prepaid card industry, identifies how issuers can maintain profitability in a market that’s being challenged by new players and impending government regulations, and evaluates various paths to success.

Here are some key takeaways from the report:

  • There were 10.7 billion prepaid card transactions worth $290 billion in 2016, according to The Federal Reserve. Business Insider Intelligence expects that to grow to $396 billion by 2022. 
  • The prepaid space has historically been filled with incumbents like Green Dot. But new players, like Apple, Amazon, and Venmo, are trying to gain share, which is pushing large prepaid firms to merge or acquire one another to grow.
  • Issuers can adapt to the change in the space, and grow their share of the market, by providing convenient, multichannel access, and doing so in a way that facilitates profitability. Targeting younger consumers, both from the underbanked and high-income segments, as well as accessing users from physical as well as digital channels, can help facilitate this growth.

In full, the report:

  • Sizes the US prepaid card market and estimates its future trajectory.
  • Identifies industry leaders and the newcomers to prepaid that are threatening their market share.
  • Evaluates growth factors and inhibitors that are increasing competition in the space.
  • Issues recommendations and strategies that issuers can implement to stay ahead in such a rapidly shifting space.
Subscribe to an All-Access pass to Business Insider Intelligence and gain immediate access to: This report and more than 250 other expertly researched reports Access to all future reports and daily newsletters Forecasts of new and emerging technologies in your industry And more! Learn More

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AI IN BANKING AND PAYMENTS: How artificial intelligence can cut costs, build loyalty, and enhance security across financial services

Tue, 06/18/2019 - 1:02am  |  Clusterstock

This is a preview of a research report from Business Insider Intelligence, Business Insider's premium research service. To learn more about Business Insider Intelligence, click here

Artificial intelligence (AI) is one of the most commonly referenced terms by financial institutions (FIs) and payments firms when describing their vision for the future of financial services. 

AI can be applied in almost every area of financial services, but the combination of its potential and complexity has made AI a buzzword, and led to its inclusion in many descriptions of new software, solutions, and systems.

This report from Business Insider Intelligence, Business Insider's premium research service, cuts through the hype to offer an overview of different types of AI, and where they have potential applications within banking and payments. It also emphasizes which applications are most mature, provides recommendations of how FIs should approach using the technology, and offers examples of where FIs and payments firms are already leveraging AI. The report draws on executive interviews Business Insider Intelligence conducted with leading financial services providers, such as Bank of America, Capital One, and Mastercard, as well as top AI vendors like Feedzai, Expert System, and Kasisto.

Here are some of the key takeaways:

  • AI, or technologies that simulate human intelligence, is a trending topic in banking and payments circles. It comes in many different forms, and is lauded by many CEOs, CTOs, and strategy teams as their saving grace in a rapidly changing financial ecosystem.
  • Banks are using AI on the front end to secure customer identities, mimic bank employees, deepen digital interactions, and engage customers across channels.
  • Banks are also using AI on the back end to aid employees, automate processes, and preempt problems.
  • In payments, AI is being used in fraud prevention and detection, anti-money laundering (AML), and to grow conversational payments volume.

 In full, the report:

  • Offers an overview of different types of AI and their applications in payments and banking. 
  • Highlights which of these applications are most mature.
  • Offers examples where FIs and payments firms are already using the technology. 
  • Provides descriptions of vendors of different AI-based solutions that FIs may want to consider using.
  • Gives recommendations of how FIs and payments firms should approach using the technology.
Subscribe to an All-Access membership to Business Insider Intelligence and gain immediate access to: This report and more than 250 other expertly researched reports Access to all future reports and daily newsletters Forecasts of new and emerging technologies in your industry And more! Learn More

Purchase & download the full report from our research store

Join the conversation about this story »

Soon nearly a third of US consumers will regularly make payments with their voice

Mon, 06/17/2019 - 11:03pm  |  Clusterstock

This is a preview of a research report from Business Insider Intelligence, Business Insider's premium research service. Click here to learn more.

A revolution in payments and banking is beginning as virtual assistants like Siri and Alexa gain the abilities of cashiers, personal shoppers, and bank tellers.

Already, Siri can help users make peer-to-peer (P2P) transfers with Venmo, Alexa can pay off Capital One credit card bills, and Google Assistant can let users shop with their voice from nearby stores. 

This is just the beginning. Today, 18 million US consumers have made a voice payment, and Business Insider Intelligence projects that figure will quadruple over the next five years. 

In a new report, Business Insider Intelligence explores how and why financial services providers such as PayPal and Bank of America are positioning for voice interfaces to take off. The report includes actionable recommendations that draw on interviews with executives spearheading voice initiatives, as well as exclusive survey data from our proprietary research panel. 

Here are some of the key takeaways from the report:

  • Voice payments are catching on — 8% of US respondents to a 2017 Business Insider Intelligence survey said they used voice commands to buy something, send money to a friend, or pay a bill.
  • Adoption is set to grow from 8% to 31% of US adults by 2022. Three factors will fuel this growth: an explosion of voice-enabled devices, generational gains in AI, and a strong consumer value proposition for voice payments.
  • Payments providers are moving in: Amazon, Apple, Google, and PayPal are part of the growing list of companies making these next-generation payments possible.
  • Banks are betting on AI, too. Bank of America, Capital One, USAA, and more are rolling out conversational interfaces to their customers.
  • Next-generation voice assistants will blow the current generation away. Voice payments will evolve from clunky and poorly scripted sessions to interactions as natural as one might have with a personal shopper or bank employee.
  • Getting to the next generation will not be easy, but the payoff will be large. Grounded in realistic expectations of adoption in the years ahead, providers of voice payments and banking experiences stand to accumulate early advantages by moving in early.

 In full, the report:

  • Shares current and projected adoption of voice payments.
  • Outlines voice payments and banking integrations on the market.
  • Examines growth drivers and barriers to consumers' voice payments adoption.
  • Provides strategies for successfully deploying voice interfaces.
Get The Voice Payments Report

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The stock market is entering its 2 most important weeks of the year. Here's what Wall Street experts recommend to navigate the chaos and make a killing.

Mon, 06/17/2019 - 10:33pm  |  Clusterstock

  • The Federal Reserve's meeting this week and the G20 summit next week are poised to give investors key updates on two of the stock market's biggest drivers of late: interest rates and trade. 
  • We've rounded up commentary from top Wall Street experts on what is at stake and where to invest for every eventuality. 
  • Click here for more BI Prime stories.

Wall Street is waiting in suspense for the outcomes of two events that will unfold over the next two weeks.

These could have been run-of-the-mill proceedings at any other time. But given that they relate to what are arguably the biggest drivers of recent volatility — monetary policy and trade policy — they are crucial forks in the road that will set the tone for the rest of this year.

The action begins on Wednesday, when the Federal Reserve concludes the policy meetings where it's expected to debate its first interest-rate cut since the Great Recession in 2009. Almost no one expects the guillotine to drop this week, but any inklings for the months ahead that are contained in the Fed's statement, projections, and press conference will be of market-moving importance.

The action continues next week Friday at the G20 meeting in Japan, where President Donald Trump and his Chinese counterpart are expected to meet. Trump has already suggested a trade-war escalation is on the cards, threatening to slap tariffs on $300 billion worth of additional Chinese goods if President Xi Jinping skips the gathering.    

These events, though more than a week apart, are intertwined in that a worsened trade war would hurt the US economy and pressure the Fed to reduce borrowing costs. Here's what some of Wall Street's top strategists are expecting for the weeks ahead, and how they recommend you should invest.

The Fed meeting

Besides this being the first serious prospect of a rate cut in 10 years — and since the Fed began its hiking cycle in 2015 — what makes the meeting so consequential is the dramatic manner in which traders adjusted their expectations. 

At the start of May, traders saw just an 8% probability that the Fed will cut rates during its July meeting. Within six weeks, however, they priced in a near-100% chance of a cut.

For an explanation of why, look no further than the escalating trade war that tanked the stock market and sparked a bond-market rally in May. Fed Chairman Jerome Powell further stoked the market's speculation about a rate cut when he said the central bank would "act as appropriate" to keep the economic expansion going.

"Similar repricings this far before a meeting have only happened a handful of times in the last 30 years and those instances tended to be in or within 12 months of a recession," said Michael Wilson, Morgan Stanley's chief US equity strategist, in a note to clients. 

Read more: The US economy is resisting a slowdown plaguing the rest of the world. Here's why one Wall Street expert worries its fortunes are about to change.

The Fed frequently delivered on rate cuts before or at such meetings when traders changed their minds so quickly, Wilson said. What this means is that the Fed's decision either way holds unequal outcomes for investors: If they don't cut in July, they risk triggering a stock-market meltdown and tighter financial conditions. And if they deliver what the market is already expecting, a modest relief rally would follow, Wilson said. 

BTIG's Julian Emanuel expects the Fed to deliver what investors are expecting, with at least two rate cuts this year. In this eventuality, financial stocks will benefit as the long-term interest rates that banks lend at rise faster than the short-term ones they use to borrow, he said.

The G20 summit

The market's performance in May is all you need to look at to understand investors' fears about a global trade war. 

The chaos intensified in the first week of May, when Trump's threat to raise tariffs on $200 billion of Chinese goods sparked the worst week of the year for the S&P 500 and Dow Jones industrial average. All told, the Dow fell for five straight weeks through May 24, its longest losing streak in nearly eight years. 

That's why all eyes will be on what Trump and Xi can achieve at the G20 meeting.

In the worst-case scenario where there's no trade agreement and the Fed remains bent on raising rates, go long gold and volatility, said Michael Hartnett, the chief investment strategist at Bank of America Merrill Lynch, in a recent note to clients. The SPDR Gold Shares exchange-traded fund and Treasury bills will be likely outperformers, while investment-grade bonds and tech stocks will be likely underperformers, he added.   

But the reverse scenario could be favorable for stocks, according to Emanuel. In fact, he says the bar for progress on trade is low because both Trump and Xi understand the economic damage that awaits their countries if the dispute drags on.

A trade deal would open the gateway for the S&P 500 to rise to his year-end target of 3,000, or nearly 4% above its current level, Emanuel said.

Hartnett also said the S&P 500 would rise above 3,000 if there's a deal. In that scenario, go long stocks and high-beta assets, he recommended. The most likely winners would be small-cap stocks, semiconductors, industrials and emerging-market bonds.

And, you might want to avoid consumer staples, which he sees as the likely underperformer.   

SEE ALSO: 'We're going to get rolled': Billionaire investor Stanley Druckenmiller breaks down why the US is headed for devastating losses to China in the trade and tech wars

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$31 billion Atlassian just revamped its M&A term sheet to take on more risk in the acquisition process and make it less stressful for founders to sell their companies (TEAM)

Mon, 06/17/2019 - 7:19pm  |  Clusterstock

  • Atlassian, the developer software company, just revamped its term sheet for mergers and acquisitions to take on more risk and reduce "antagonism" between buyer and buyee. 
  • Chris Hecht, the head of corporate development at Atlassian, said he hopes the new term sheet will align Atlassian's M&A process more deeply with the company's value of transparency, and reduce some of the emotional stress that founders face when they sell their companies.
  • Among the changes, Atlassian has taken on more financial risk than it previously had, which takes some of that risk away from startup founders.
  • Click here for more BI Prime stories.

Over the years, developer software company Atlassian has spent $1 billion to buy more than 20 companies, five of which it snapped up in the past year alone. And yet the $31 billion company is taking a stand against the power that large acquirers like itself have over the startups they buy.

On Monday, Atlassian made an unprecedented move to publish its new M&A term sheet, giving potential acquisitions — and everybody else — a deep look into exactly what they're getting themselves into when they enter in to the deal-making process. 

For Chris Hecht, the head of corporate development at Atlassian, there's too much "antagonism built into the process" of acquisitions, which makes it difficult for companies and their leadership teams to actually integrate with the bigger company once a deal closes. 

While many founders are excited to sell their startups, the selling process can leave them feeling like they shoulder too much financial risk if something goes wrong in the process, Hecht said. Tense negotiations take an emotional toll the people involved, and that toll can continue to burden the founders after the companies have merged, he said.

"They're coming into this process super excited that they're going to sell the company, but it becomes very arduous for them mentally and emotionally," Hecht said.

Read more: Investors used to balk at startups for software developers — but after Microsoft bought GitHub for $7.5 billion, they're all in
Hecht, who spent time as an investment banker before leading mergers and acquisitions at Salesforce, worked closely with Atlassian Chief Legal Officer Tom Kennedy to revamp the default term sheet the company uses in M&A. The two execs agreed on one big idea: Even if an acquirer, like Atlassian, takes on more risk on its term sheet, it will benefit in the long run from a less stresful and more peaceful M&A process.

"M&A as a practice traditionally has not been aligned with Atlassian's values," Hecht told Business Insider. "We think that increasing transparency will drive a much healthier experience. We think we can drive a lot more value more quickly."

More financial risk, but less stress

The new term sheet hasn't been used yet. But the next company that gets an offer from Atlassian will notice a few founder-friendly elements that aren't offered by an other tech companies, as far as Hecht is aware.

For one, Hecht and Kennedy wanted to close the risk gap, which their analysis found protects acquirers beyond what is necessary. 

"Buyers are getting a lot more insurance than they need. We spent many months going through hundreds of deals to figure out how much risk sharing was expected," said Hecht.

The term sheet eliminates some key provisions common at other companies, such as indemnity clauses — special provisions designed to protect the acquirer. Those provisions might include the ability to hold a startup's founders legally liable for certain problems that arise as part of the deal, or even change the terms of escrow. 

Escrow terms mean that part of the proceeds of the sale are held by a third party until both parties agree that the sale is satisfactory, almost like a security deposit. 

Most companies ask for 10% to 20% of the purchase price to be held back in escrow, Hecht said. That can be annoying for founders, who then have to wait for the deal to close to everybody's satisfaction to see their full payout. 

Atlassian's new terms ask for just 5% in escrow, going as low as 1% in escrow if the company opts to purchase insurance to protect the deal.

This fixes a sticking point for a lot of founders looking to sell, Hecht said, because they often have to negotiate between the buyers who insist on keeping a large amount of the sale total in limbo, and from their investors and other shareholders who want to put as little of the purchase price at risk as possible.

Click here to see Atlassian's new term sheet.

SEE ALSO: Going public makes $12 billion CrowdStrike an anomaly in the crowded cybersecurity space where M&A is the norm. Here's why.

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NOW WATCH: WATCH: The legendary economist who predicted the housing crisis says the US will win the trade war

I drove a $109,000 Range Rover hybrid to see if technology could improve on an already impressive SUV — here's the verdict

Mon, 06/17/2019 - 7:01pm  |  Clusterstock

  • I recently tested a Range Rover HSE P400e — an expensive, luxury SUV with a nifty hybrid drivetrain.
  • Range Rover is known for solid off-road performance, chic style, and for six-and-eight-cylinder engines and diesels — not drivetrains that get a boost from electric motors.
  • But I found the small-displacement four-cylinder engine in this SUV, matched up with a hybrid system, to be an excellent piece of engineering.
  • Visit Business Insider's homepage for more stories.

Everybody wants SUVs, and some people want fancy, high-end utes. Their needs are being abundantly addressed right now by all the major automakers.

Customers who've always valued premium vehicles that can nonetheless hold up under extreme conditions and handle anything nature throws at them have for decades grooved on Range Rovers (and before them, Land Rovers). These trucks have snoot appeal, but don't be distracted by their upper-crust boosters. We're talking landed gentry here, and the land often didn't have roads.

Range Rover's problem is that it makes vehicles with big gas motors, and the ones that don't fall into that category run in diesel. These are great drivetrains, but they're out of step with a future in which sub-20-mpg vehicles could be effectively outlawed. So Range Rover and its engineers need to begin exploring ways to preserve the brand's DNA while still preparing for day when 5.0-liter supercharged V8s simply won't cut it.

The Range Rover HSE P400e I recently drove is an early effort. It poses a tough question: Can a small-ish hybrid engine get the job done for a Range?

Read on to find out if it can.

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The 2019 Range Rover HSE P400e plug-in hybrid arrived at our suburban New Jersey test center wearing a handsome "Byron Blue Metallic" paint job.

The Range Rover has been in the lineup since the 1970s; the fourth-generation has been around since 2013 and now has a hybrid option. Our tester had enough extras to take the sticker up to $109,000 from an already rich $96,000.

Range Rovers are supposed to revel in their boxy glory, but this example of the core vehicle was made a bit flashier through the addition of some additional flash.

In profile, of course, nobody is going to mistake this vehicle for anything other than a Range Rover. The gorgeous 21-inch wheels are nearly $3,000 extra. You can also clearly see the side vent that's part of a $1,000 "Shadow Exterior Pack."

An air suspension can raise and lower the vehicle, for off-road duty or to ease getting in and out of the cabin.

To a certain extent, Range Rover aesthetics are so constricted by the legacy of the brand that there's only so much design can do to distract from proportion. The rear end isn't a strong point.

It does, however, proclaim utility.

And in addition to unattractive tail lights, the rear harbors a cool feature ...

... A split liftgate!

What you have here is a rolling bench! perfect for yanking on some Wellies before a romp with the hounds.

And yes, our test vehicle came with one of Land Rover's new pet packages, including a collapsible transporter and a water bowl.

I have a dog, but he detests carriers of any sort, so I couldn't really sample this feature. However, it was well-designed and it looked as though it would please a lot of canines.

Under the hood, the Range Rover HSE P400e has a 2.0-liter, four-cylinder engine that makes 296 horsepower, plus a 114-horsepower electric motor that runs off a 13-kilowatt-hour battery. The total power output is 398 horsepower, with a stout 472 pound-feet of torque.

With six-cylinder and V8 Ranges, you're not going to see better than 20 mpg combined. That goes up with the six-cylinder turbodiesel.&

We didn't scientifically evaluate the hybrid's fuel-economy, but it bumps the MPGs up a bit, at least from our observations (the government hasn't yet officially rated the vehicle). We're definitely aren't taking Prius data here. But the hybrid system definitely adds some pop to the relatively modest four-banger, and the solid torque means the hefty, 5,000-pound-plus SUV and still tow more-or-less its own weight.

Jaguar Land Rover says the recharge time from basic 110-volt outlet is 14 hours. With level-two charging at 220 volts, you're looking at something like four hours.

The charge port is located under a hatch in the front grille.

The ebony/ivory interior was elegant and plush without being fussy.

Land Rover and Range Rover are in a tricky position in that they need to combine luxury and durability, for the town-and-country set. These days, there also needs to be a lot of technology. I found the Sport hybrid insides to be generally up the task of carrying the Range Rover name.

The leather-wrapped and bushed-metal-trimmed steering wheel has the usual button-fest to control systems, and the all-digital instrument cluster goes for old-school gauges with new-school information display.

There's also a head-up display that projects essential information directly in front of the driver.

The eight-speed transmission is quite smooth. The gearshift selector is this large knob that rises from the console when the vehicle is fired up and retracts when it's switched off. There are also paddle shifters behind the steering wheel, for manual mode.

The Range's driving modes are managed using this simple interface between the seats. In all-electric mode, it's supposed to be able to operate for 31 miles before returning to internal combustion.

The infotainment and climate-controls are screen-based. The AC/heat and heated and cooled seats are no problem, but the 10-inch TouchPro infotainment screen, while beautifully designed, remains a work-in-progress as far as usability goes.

The dual screen can be configured to display different functions. Everything works, from GPS navigation to Bluetooth and device connectivity, but the tiled interface has a learning curve. The Meridian audio system sounded superb

If it's all too annoying to deal with, Apple CarPlay is there as either a fallback — or first choice.

The rear seats are comfortable, and legroom is pretty good.

The dual-pane moonroof admits a lot of light ...

... And rear-seat passengers have their own climate controls.

So what's the verdict on this high-tech, luxury off-roader?

The real test of the Range Rover, to be honest and evocative of my favorite Roxy Music album, is to explore country life. The carmaker's Terrain Response system enables the four-wheel-drive setup to be configured for a variety of conditions, a legacy of the brand's reputation for formidable offroad capability.

You buy a Range if you seriously intend to bust around the back 40, surmounting hill and dale in wind and rain, perhaps passing weekends with a bit of shooting. You might contend with mud, snow, or ice, and fording a stream could be on the agenda.

But you also buy a Range if you want to tool around the 'burbs in Sloane Ranger style. You could choose a Jeep, but the Range is more elite. It sends the right signals at the school-dropoff line and looks right in certain parking lots.

In that context, does it matter if you're getting 30 mpg or just 20? It doesn't, but for Jaguar Land Rover, a portfolio made up of V6 and V8 SUVs, with some robust diesels thrown in, might not, you know, survive the brave new world of higher emission and fuel-economy standards. Hybridization is a good way for the brand to come into compliance.

That might sound sort of mean-spirited of me, so let me now discuss my favorite aspect of the Range Rover HSE P400e I tested — the drivetrain!

It's a dang four-banger! In a really big truck! And it makes almost 500 pound-feet of torque! I felt like I had a V6 under the hood, at the very least. This feat of engineering has won my undying respect. I'm not sure I'd buy it, but as technological triumphs go, JLR should pat itself on the back and give the folks responsible for this powerplant a bonus.

Otherwise, I tend to be quite taken by Range Rovers, and the HSE P400e was no exception. I've never much liked the infotainment system, but it's more an issue of function than design. But the rest of the machine is superb. Range Rovers are also keeping up with the times; my tester came with a host of driver-assist features, including lane-keep assist, blind-spot assist, and adaptive cruise control.

Yeah, this Range ain't cheap. But it is worth it. And for some owners, the added MPGs and in-town optimization could certainly be very appealing.

Apple's China problem isn't going away, JPMorgan and Credit Suisse warn in a pair of cautious reports (AAPL)

Mon, 06/17/2019 - 6:34pm  |  Clusterstock

  • Apple's position in the Chinese market remains precarious, analysts at JPMorgan and Credit Suisse said on Monday in separate reports. 
  • JPMorgan trimmed its price target and iPhone sales estimates because of macroeconomic uncertainty fueled by the US-China trade war but kept its bullish rating.
  • Credit Suisse said that although iPhone sales in China through May are "less bad" than past quarters, competition in the region remains a fundamental challenge.
  • Track Apple's stock price in real time here.

Apple's challenges in China have eaten into the technology giant's business for months — and they're not going away, a pair of prominent Wall Street firms said on Monday.

Analysts at JPMorgan and Credit Suisse addressed China's posture in the critical market amid declining iPhone sales and trade tensions with the US, updating their clients on this quarter's trends.

JPMorgan's analysts, for their part, slightly lowered their price target and iPhone shipments outlook, while Credit Suisse said trade uncertainty and "deeper structural issues" would render Apple's stock price rangebound.

The two reports come amid a tangle of macroeconomic and company-specific challenges that has ensnared Apple and injected volatility into its stock price this year.

Slowing global economic growth at a late stage in the business cycle is under a microscope, particularly in the key US and Chinese markets. Meanwhile, the trade war the two nations are locked in has rattled markets and weighed on growth outlooks.

Further, Apple shareholders have been underwhelmed by some of the company's offerings in spaces like streaming as it seeks to diversify away from its flagship iPhone product. 

Read more: Apple's big, flashy event underwhelmed investors. Here's why.

"Looking beyond macro/trade concerns, we believe aggressive local competition and a narrower ecosystem advantage in China remain deeper structural challenges for Apple, with no easy near-term fix," the Credit Suisse analysts led by Matthew Cabral wrote.

Cabral's team is discouraged in part by retail sales in China, growth of which has slowed amid rising tensions between Washington and Beijing. 

JPMorgan assumed a slightly more sanguine stance than their peers at Credit Suisse. 

"The worsening macro environment and its likely impact on consumer spending globally is driving us to trim our iPhone shipment estimates, which in effect modestly lowers the earnings outlook for the near-term," including estimates through year-end, the JPMorgan analysts led by Samik Chatterjee wrote. 

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The firm lowered its price target to $235 from $233 and now sees Apple shipping 183 million iPhones to China this year, compared with a prior 185 million forecast.

Chatterjee's team maintained its bullish "overweight" rating but believes the region's concerns driven by the US-China trade dispute are somewhat temporary. They're also encouraged by Apple's performance in Asian regions outside China. 

"We find investor concerns relative to Apple's share loss in China somewhat overblown, given the continued decline in iPhone shipments in China over the last few years, which Apple has been used to navigating consistently by leveraging their strong presence in the developed markets and APAC ex-China," they wrote.

Apple is expected to report its third-quarter results later this summer. Apple's stock has enjoyed a 23% rally so far this year after a dismal fourth quarter, though it has fallen 17% since its record high in October. 

Now read markets coverage from Markets Insider and Business Insider:

The US economy is resisting a slowdown plaguing the rest of the world. Here's why one Wall Street expert worries its fortunes are about to change.

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Beware the 'perfect storm of negative events' one expert says will send stocks crashing

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Peloton's sales are surging as it gears up for an IPO. Insiders and analysts think it may only be getting started.

Mon, 06/17/2019 - 4:20pm  |  Clusterstock

Business has already been booming for Peloton. But for the maker of smart fitness equipment, the good times may only be starting to roll. 

That's the word from early investors and industry analysts. In Peloton, they see a company whose business model looks less like a traditional gym equipment manufacturer and more like the ones Apple and Gillette rode to success.

As it's attracted a cult-like following since its founding in 2012, the company has seen its sales and valuation skyrocket. Both may be about to go much higher. The company earlier this month confidentially filed its paperwork for an initial public offering.

Peloton faces a host of challenges, including increasing competition, relatively high prices, and a limited selection of products. But analysts and early investors are confident it's more than ready to meet them.

SUBSCRIBE TO READ: Peloton, the fitness startup with a cultlike following, could go public at an $8 billion valuation. Insiders reveal why its business seems set to explode.

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A chilling report suggests the pilot on MH370 may have depressurized the cabin, 'gently' killing the more than 200 passengers on board before crashing

Mon, 06/17/2019 - 4:10pm  |  Clusterstock

A leading theory on why Malaysia Airlines Flight MH370 vanished on March 8, 2014, doesn't point to a hijacker, pilot error, or a mechanical failure — but to the captain of the plane.

In a meticulous new report published by The Atlantic, William Langewiesche, a former national correspondent for the magazine, gives credence to that theory.

Friends of Zaharie Ahmad Shah, who was the captain of MH370, told The Atlantic that the 53-year-old pilot was depressed and lonely, engaged in one-sided flirting with young women on Facebook, and spent much of his non-flying time pacing empty rooms inside his home. One close friend of Shah even said he believed the pilot crashed the plane. 

Read more: An extensive new report suggests that the missing MH370's pilot was 'clinically depressed' and purposely killed all 239 on board

MH370 deviated from its planned route at 1:25 a.m. local time, more than 40 minutes after takeoff. Then the flight went on a westward path across Malaysia, rather than north to its final destination of Beijing. 

Such a sudden deviation would have been noticed by the plane's 200-plus passengers. Langewiesche reported that Shah likely depressurized the cabin to subdue any rebellion. 

"An intentional depressurization would have been an obvious way — and probably the only way — to subdue a potentially unruly cabin in an airplane that was going to remain in flight for hours to come," Langewiesche, who is also a pilot, wrote.

The cabin masks have about 15 minutes of supply at altitudes below 13,000 feet, according to The Atlantic, but MH370 stayed at a cruising altitude of 40,000 feet for at least an hour. Meanwhile, Shah could simply put on one of the four oxygen masks, which have hours of supply, available in the cockpit.

In the final minutes for MH370's passengers, they likely put on the useless oxygen masks and were asphyxiated. Langewiesche wrote:

The cabin occupants would have become incapacitated within a couple of minutes, lost consciousness, and gently died without any choking or gasping for air. The scene would have been dimly lit by the emergency lights, with the dead belted into their seats, their faces nestled in the worthless oxygen masks dangling on tubes from the ceiling.

Read the report in The Atlantic here »

SEE ALSO: The mystery of MH370 remains 5 years later — here are all the theories, dead ends, and unanswered questions from the most bizarre airline disaster of the century

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Investors are banking on rate cuts to extend the stock market's gains. Here's why their hopes could be dashed.

Mon, 06/17/2019 - 4:05pm  |  Clusterstock

  • The stock market and bond market have priced in multiple interest-rate cuts from the Federal Reserve this year and next. 
  • Still, industry watchers don't think a rate cut will come in June. 
  • Cuts have not always been positive for the stock market. 
  • The Fed will likely hold off lowering rates until after the G20 summit, where there might be progress on trade talks between the US and China. 
  • Read more on the Markets Insider homepage.

Equity investors may have to wait until July for lower interest rates.

The Federal Reserve is meeting on Tuesday and Wednesday to assess the state of the US economy and decide whether to lower interest rates in what would be the first cut since 2008.

Though both the stock market and the bond market have priced in cuts, it is unlikely that the Fed will move to lower rates at this meeting, according to Ed Yardeni, the chief investment strategist of Yardeni Research.

"To lower [rates] now when it's not at all clear that it's necessary would send stock prices soaring," Yardeni said. That would set the stage for much rockier economic performance going forward, he said.

The Fed meeting comes amid a debate over whether a recession is on the horizon. While the stock market is nearing historic highs, the bond market has also rallied, most notably in the 10-year Treasury note, plunging the benchmark yield nearly below 2%. This widened the negative difference between the 10-year note and the three-month bill: a so-called yield-curve inversion that has long signaled recessions.

But underlying economic data is looking pretty good, analysts say, especially after last week's strong retail release and consumer-confidence numbers. Instead of cutting rates, it's more likely the Fed will extend its pause while delivering a dovish message for the future.

"They'll probably put the ball on the tee here potentially for that rate cut happening on July 31st," Ryan Detrick, a senior market strategist at LPL Financial, said.

The reason for the Fed's policy reversal is also still up in the air — Federal Reserve Chairman Jerome Powell opened the door for rate cuts when escalating trade tensions between the US and China in May sent the S&P 500 into a tailspin and boosted bonds. The Fed might get more information this week on potential trade-talk progress at the G20 summit if President Donald Trump and Chinese President Xi Jinping meet. It's unlikely the Fed would move before then to avoid having "egg on their face" if nothing comes from G20, Detrick said.

Powell will have to deliver a clear dovish message even if there is no rate cut to keep both the bond market and the stock market at ease. To be clear, the Fed does not prioritize market performance in its decisions to raise or lower rates — it's primarily looking at keeping the US economy humming.

But that being said, the market's performance is a strong indicator of economic success. If Powell isn't dovish enough or hints at a hawkish stance going forward, "it will be a disaster," Didier Anthamatten, a senior portfolio manager at Unigestion, said. "It's more about the expectation from the market."

To be sure, there is some debate over whether an interest-rate cut would lift equities, even though the S&P 500 is roughly 2% away from a record high. Historically, cuts have not always been positive.

"In the past 20 years, the so-called 'Fed Put' has failed to revive equities the way rate cuts did in the 1990s," Francois Trahan, a UBS strategist, wrote in a note Monday. "The two easing cycles of this millennium took place amidst severe declines in equities."

But analysts argue that the present more closely mirrors the 1990s, when the US economy was doing OK and global growth concerns spurred rate cuts, which pushed the S&P 500 higher. Today, global trade concerns seem to be the driving force, not economic data.

Given this reality, the Fed will probably wait to see if global tensions around trade heat up before lowering rates. If they were to move now, it would take an important tool from the Fed's arsenal. Because the Fed funds rate is so low, "they don't have much room to lower interest rates if we really get into trouble," Yardeni said.

SEE ALSO: A Wall Street investment chief overseeing $26 billion breaks down why recession fears are overblown, even as the market clamors for Fed relief

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TECH EXEC MASTERCLASS: How top tech execs at some of the world's biggest companies are driving results

Mon, 06/17/2019 - 3:56pm  |  Clusterstock

  • The world is changing and corporations are turning to a variety of new technologies — from the cloud to artificial intelligence to big data — to keep pace.
  • Business Insider regularly interviews the chief technology officers and chief information officers leading some of the world's best-known companies through the challenging landscape.
  • You can read them all by subscribing to BI Prime.
Here are some of the recent interviews with top tech execs published by Business Insider.

Join the conversation about this story »

NOW WATCH: Watch Ford's delivery robot that walks on two legs like a human

High-speed trading firm GTS is making a push into the rapidly-changing bond market, and the CEO says 'there is so much we can do'

Mon, 06/17/2019 - 3:48pm  |  Clusterstock

  • GTS, a market maker in several asset classes, has plans to expand into US corporate bond trading.
  • Corporate bonds represent a natural hedge for the trading GTS is already doing in exchange-traded funds.
  • However, trading corporate bonds is not foolproof, as the markets have significantly less data than markets HFTs typically trade in. 
  • Click here for more BI Prime stories.

One of Wall Street's most sophisticated high-frequency trading firms plans to leverage a recent acquisition to expand into the rapidly evolving corporate bond market

Global Trading Systems views corporate bonds as the natural next step for its business thanks to its recent completed acquisition of Cantor Fitzgerald's exchange-traded fund business, which closed in May. Ari Rubenstein, CEO and cofounder of GTS, told Business Insider he's extremely enthusiastic about the work his firm can do in ETFs, corporate bonds, and wholesale market making, another business GTS also acquired from Cantor. 

Rubenstein said he spends a lot of time with the new additions, of which there were 30, to discuss potential areas of growth.

"I've never been more excited to come to work," Rubenstein said. "There is so much we can do. When we look at how they've been servicing clients, and because we have scale in technology, we can do this 50 times better."

Read more: Wall Street banks have seen electronic trading chip away at their control of the corporate bond market. Now they're fighting back. 

ETFs are a natural stepping stone into bond trading, as the latter represents a way to hedge risks one could face by trading the former. Implementing that strategy was expedited thanks to the progress made by electronic marketplaces for trading such MarketAxess and Tradeweb. 

The bond market, which was valued at $9.2 trillion in the US in 2018, has long been a top-heavy market dominated by the largest banks and investors with a majority of trading done over the phone. Electronic marketplaces have slowly captured more market share, with roughly 26% of all trading taking place electronically. 

High-frequency traders have taken notice, recognizing an opportunity to use their cutting edge technology in another asset class. In April, The Wall Street Journal reported Jane Street, one of the largest traders of ETFs, was making a push into trading corporate bonds. 

Ryan Sheftel, global head of fixed income at GTS, told Business Insider the firm is currently an active participant in corporate bonds with the hopes of becoming a committed market-maker soon. 

"You can see, the clients are voting with their feet on how they want to execute those securities," Sheftel said. "Taking our highly-adaptable liquidity, customizing technology, which was deployed for the fixed income ETFs, and now moving over to the underlying corporate bonds. That's very logical."

Sheftel said GTS is making a push into corporate bonds through both organic and inorganic growth. For the former, that includes bringing on those with expertise in pricing and hedging a large book of corporate bonds, Rubenstein said. As for the underlying tech, he said it's largely agnostic to what the firm is actually trading.

As for inorganic growth, Sheftel said GTS is looking at making more acquisitions to build out the team. Some firms have approached GTS, he added, but he declined to get into specifics on how serious talks were. 

Sheftel said it's a natural progression of the financial markets where offering trading in a single asset class is no longer appealing to customers.

"If you are going to be big in trading, you need to be big across a variety of products," Sheftel said. "People who maybe have a high-quality niche expertise, niche went from being a major positive factor to now more of a limiting factor."

See more: The opaque bond market could be the next frontier for the booming alternative-data business that's on track to grow to $7 billion

Kevin McPartland, the head of market structure and technology research at consultancy Greenwich Associates, told Business Insider the push from trading firms to diversify their offerings comes at a time when profit margins have slimmed in their traditional businesses.

Equities, foreign exchange and, to some extent, treasuries have become crowded asset classes for market-makers, he said. 

"They are out looking for new opportunities, new places where they can deploy their technology and their expertise to bring liquidity to the market and, of course, find a profitable asset classes," McPartland said. 

That being said, high-frequency traders' success in the corporate bond market isn't a sure thing. The lack of available data in bond trading makes continuously pricing the assets a complex and difficult task that can't be overlooked, McPartland added.

Relationships also need to be considered, as HFTs will need to work to get investors comfortable trading with counterparties they aren't used to working with. While that transition has been occurring for years, there is still some work to be done, he added.

"We're a long way away from where we were 10-15 years ago, but I still think there is some continuous effort to be made there to get clients understanding the value that they bring," McPartland said. "Why in some cases they are very competitive with banks and in other cases they are complimentary." 

Join the conversation about this story »

NOW WATCH: WATCH: The legendary economist who predicted the housing crisis says the US will win the trade war

Elizabeth Holmes is reportedly married. Here’s a timeline of the Theranos CEO’s rise and fall, from becoming the world’s youngest female billionaire to getting charged with massive fraud

Mon, 06/17/2019 - 3:19pm  |  Clusterstock

  • Elizabeth Holmes dropped out of Stanford University at 19 to start blood-testing startup Theranos, and grew the company to a valuation of $9 billion.
  • But it all came crashing down when the shortcomings and inaccuracies of the company's technology were exposed, and Theranos and Holmes were charged with massive fraud.
  • HBO debuted a documentary Monday chronicling the trajectory of Theranos called "The Inventor: Out for Blood in Silicon Valley."
  • Here's the story of Holmes' rise and eventual downfall. 

In 2014, blood-testing startup Theranos and its founder, Elizabeth Holmes, were on top of the world.

Back then, Theranos was a revolutionary idea thought up by a woman hailed as a genius who styled herself as a female Steve Jobs. Holmes was the world's youngest female self-made billionaire, and Theranos was one of Silicon Valley's unicorn startups, valued at an estimated $9 billion. 

But then it all came crashing down.

The shortcomings and inaccuracies of Theranos's technology were exposed, along with the role Holmes played in covering it all up. Holmes was ousted as CEO and charged with massive fraud, and the company was forced to close its labs and testing centers, and eventually shutter operations altogether.

Holmes and Theranos are the focus of a new HBO documentary that debuted in March, called "The Inventor: Out for Blood in Silicon Valley." The documentary joins the book "Bad Blood" and a podcast from ABC News that have combed through the story of Theranos and how its founder was able to defraud investors and potential customers.

This is how Holmes went from precocious child, to ambitious Stanford dropout, to an embattled startup founder charged with fraud. 

SEE ALSO: Leaked video shows Theranos employees playing the video game they created where you shoot at the reporter who exposed the startup's problems

Elizabeth Holmes was born on February 3, 1984 in Washington, D.C. Her mom, Noel, was a Congressional committee staffer, and her dad, Christian Holmes, worked for Enron before moving to government agencies like USAID.

Source: Elizabeth Holmes/TwitterCNN, Vanity Fair

Holmes' family moved when she was young, from Washington, D.C. to Houston.

Source: Fortune

When she was 7, Holmes tried to invent her own time machine, filling up an entire notebook with detailed engineering drawings. At the age of 9, Holmes told relatives she wanted to be a billionaire when she grew up. Her relatives described her as saying it with the "utmost seriousness and determination."

Source: CBS News, Bad Blood: Secrets and Lies in a Silicon Valley Startup

Holmes had an "intense competitive streak" from a young age. She often played Monopoly with her younger brother and cousin, and she would insist on playing until the end, collecting the houses and hotels until she won. If Holmes was losing, she would often storm off. More than once, she ran directly through a screen on the door.

Source: Bad Blood: Secrets and Lies in a Silicon Valley Startup

It was during high school that Holmes developed her work ethic, often staying up late to study. She quickly became a straight-A student, and even started her own business: she sold C++ compilers, a type of software that translates computer code, to Chinese schools.

Source: Fortune, Bad Blood: Secrets and Lies in a Silicon Valley Startup

Holmes started taking Mandarin lessons, and part-way through high school, talked her way into being accepted by Stanford University’s summer program, which culminated in a trip to Beijing.

Source: Bad Blood: Secrets and Lies in a Silicon Valley Startup

Inspired by her great-great-grandfather Christian Holmes, a surgeon, Holmes decided she wanted to go into medicine. But she discovered early on that she was terrified of needles. Later, she said this influenced her to start Theranos.

Source: San Francisco Business Times

Holmes went to Stanford to study chemical engineering. When she was a freshman, she became a "president's scholar," an honor which came with a $3,000 stipend to go toward a research project.

Source: Fortune

Holmes spent the summer after her freshman year interning at the Genome Institute in Singapore. She got the job partly because she spoke Mandarin.

Source: Fortune

As a sophomore, Holmes went to one of her professors, Channing Robertson, and said: "Let's start a company." With his blessing, she founded Real-Time Cures, later changing the company's name to Theranos. Thanks to a typo, early employees’ paychecks actually said "Real-Time Curses."

Source: Bad Blood: Secrets and Lies in a Silicon Valley Startup

Holmes soon filed a patent application for "Medical device for analyte monitoring and drug delivery," a wearable device that would administer medication, monitor patients' blood, and adjust the dosage as needed.

Source: Fortune, US Patent Office

By the next semester, Holmes had dropped out of Stanford altogether, and was working on Theranos in the basement of a college house.

Source: Wall Street Journal

Theranos's business model was based around the idea that it could run blood tests, using proprietary technology that required only a finger pinprick and a small amount of blood. Holmes said the tests would be able to detect medical conditions like cancer and high cholesterol.

Source: Wall Street Journal

Holmes started raising money for Theranos from prominent investors like Oracle founder Larry Ellison and Tim Draper, the father of a childhood friend and the founder of prominent VC firm Draper Fisher Jurvetson. Theranos raised more than $700 million, and Draper has continued to defend Holmes.

Source: SEC, Crunchbase

Holmes took investors' money on the condition that she wouldn't have to reveal how Theranos' technology worked. Plus, she would have final say over everything having to do with the company.

Source: Vanity Fair

That obsession with secrecy extended to every aspect of Theranos. For the first decade Holmes spent building her company, Theranos operated in stealth mode. She even took three former Theranos employees to court, claiming they had misused Theranos trade secrets.

Source: San Francisco Business Times

Holmes' attitude toward secrecy and running a company was borrowed from a Silicon Valley hero of hers: former Apple CEO Steve Jobs. Holmes started dressing in black turtlenecks like Jobs, decorated her office with his favorite furniture, and like Jobs, never took vacations.

Source: Vanity Fair

Even Holmes's uncharacteristically deep voice may have been part of a carefully crafted image intended to help her fit in in the male-dominated business world. In ABC's podcast on Holmes called "The Dropout," former Theranos employees said the CEO sometimes "fell out of character," particularly after drinking, and would speak in a higher voice.

Source: Bad Blood: Secrets and Lies in a Silicon Valley Startup, The Cut

Holmes was a demanding boss, and wanted her employees to work as hard as she did. She had her assistants track when employees arrived and left each day. To encourage people to work longer hours, she started having dinner catered to the office around 8 p.m. each night.

Source: Bad Blood: Secrets and Lies in a Silicon Valley Startup

More behind-the-scenes footage of what life was like at Theranos was revealed in leaked videos obtained by the team behind the HBO documentary "The Inventor: Out for Blood in Silicon Valley." The more than 100 hours of footage showed Holmes walking around the office, scenes from company parties, speeches from Holmes and Balwani, and Holmes dancing to "U Can't Touch This" by MC Hammer.

Source: Business Insider

Shortly after Holmes dropped out of Stanford at age 19, she began dating Theranos president and COO Sunny Balwani, who was 20 years her senior. The two met during Holmes' third year in Stanford’s summer Mandarin program, the summer before she went to college. She was bullied by some of the other students, and Balwani had come to her aid.

Source: Bad Blood: Secrets and Lies in a Silicon Valley Startup

Balwani became Holmes' No. 2 at Theranos despite having little experience. He was said to be a bully, and often tracked his employees' whereabouts. Holmes and Balwani eventually broke up in spring 2016 when Holmes pushed him out of the company.

Source: Bad Blood: Secrets and Lies in a Silicon Valley Startup

In 2008, the Theranos board decided to remove Holmes as CEO in favor of someone more experienced. But over the course of a two-hour meeting, Holmes convinced them to let her stay in charge of her company.

Source: Bad Blood: Secrets and Lies in a Silicon Valley Startup

As Theranos started to rake in millions of funding, Holmes became the subject of media attention and acclaim in the tech world. She graced the covers of Fortune and Forbes, gave a TED Talk, and spoke on panels with Bill Clinton and Alibaba's Jack Ma.

Source: Vanity Fair

Theranos quickly began securing outside partnerships. Capital Blue Cross and Cleveland Clinic signed on to offer Theranos tests to their patients, and Walgreens made a deal to open Theranos testing centers in their stores. Theranos also formed a secret partnership with Safeway worth $350 million.

Source: Wired, Business Insider

In 2011, Holmes hired her younger brother, Christian, to work at Theranos, although he didn’t have a medical or science background. Christian Holmes spent his early days at Theranos reading about sports online and recruiting his Duke University fraternity brothers to join the company. People dubbed Holmes and his crew the "Frat Pack" and "Therabros."

Source: Bad Blood: Secrets and Lies in a Silicon Valley Startup

At one point, Holmes was the world's youngest self-made female billionaire with a net worth of around $4.5 billion.

Source: Forbes

Holmes was obsessed with security at Theranos. She asked anyone who visited the company’s headquarters to sign non-disclosure agreements before being allowed in the building, and had security guards escort visitors everywhere — even to the bathroom.


Holmes hired bodyguards to drive her around in a black Audi sedan. Her nickname was "Eagle One." The windows in her office had bulletproof glass.

Source: Bad Blood: Secrets and Lies in a Silicon Valley Startup

Around the same time, questions were being raised about Theranos' technology. Ian Gibbons — chief scientist at Theranos and one of the company's first hires — warned Holmes that the tests weren't ready for the public to take, and that there were inaccuracies in the technology. Outside scientists began voicing their concerns about Theranos, too.

Source: Vanity Fair, Business Insider

By August 2015, the FDA began investigating Theranos, and regulators from the government body that oversees laboratories found "major inaccuracies" in the testing Theranos was doing on patients.

Source: Vanity Fair

By October 2015, Wall Street Journal reporter John Carreyrou published his investigation into Theranos's struggles with its technology. Carreyrou's reporting sparked the beginning of the company's downward spiral.

Source: Wall Street Journal

Carreyrou found that Theranos' blood-testing machine, named Edison, couldn't give accurate results, so Theranos was running its samples through the same machines used by traditional blood-testing companies.

Source: Wall Street Journal

Holmes appeared on CNBC's "Mad Money" shortly after the WSJ published its story to defend herself and Theranos. "This is what happens when you work to change things, and first they think you're crazy, then they fight you, and then all of a sudden you change the world," Holmes said.

Source: CNBC

By 2016, the FDA, Centers for Medicare & Medicaid Services, and SEC were all looking into Theranos.

Source: Wall Street Journal, Wired

In July 2016, Holmes was banned from the lab-testing industry for two years. By October, Theranos had shut down its lab operations and wellness centers.

Source: Business Insider

In March 2018, Theranos, Holmes, and Balwani were charged with "massive fraud" by the SEC. Holmes agreed to give up financial and voting control of the company, pay a $500,000 fine, and return 18.9 million shares of Theranos stock. She also isn't allowed to be the director or officer of a publicly traded company for 10 years.

Source: Business Insider

Despite the charges, Holmes was allowed to stay on as CEO of Theranos, since it's a private company. The company had been hanging on by a thread, and Holmes wrote to investors asking for more money to save Theranos. "In light of where we are, this is no easy ask," Holmes wrote.

Source: Business Insider

In Theranos' final days, Holmes reportedly got a Siberian husky puppy named Balto that she brought into the office. However, the dog wasn't potty trained, and would go to the bathroom inside the company's office and during meetings.

Source: Vanity Fair

In June 2018, Theranos announced that Holmes was stepping down as CEO. On the same day, the Department of Justice announced that a federal grand jury had charged Holmes, along with Balwani, with nine counts of wire fraud and two counts of conspiracy to commit wire fraud.

Source: Business InsiderCNBC

In September 2018, Theranos sent an email to shareholders announcing that the company was shutting down. Theranos reportedly said it planned to spend the next few months repaying creditors with its remaining resources.

Source: Wall Street Journal

Holmes is now reportedly married o Billy Evans, the heir to hospitality company Evans Hotel Group. She reportedly wears his MIT "signet ring" on a chain around her neck, and the couple posts photos on Instagram together.

Tweet Embed:
For everyone asking about Holmes's social media. It's private. But here are a few screenshots of her and her fiancé we found online. (I personally find it crazy that she's being charged with 11 felony counts, thousands of people's lives were harmed, and she's as happy as can be.)

Source: Vanity Fair, Daily Mail

Holmes and Balwani have pleaded not guilty to the federal charges, and are both due back in court on April 22. Each of them could face up to 20 years in prison, and a $250,000 fine plus restitution for each charge, the government has said.

Source: Business Insider

Maya Kosoff contributed to an earlier version of this story. 

Why are Apple Pay, Starbucks’ app, and Samsung Pay so much more successful than other wallet providers?

Mon, 06/17/2019 - 3:03pm  |  Clusterstock

This is a preview of a research report from Business Insider Intelligence, Business Insider's premium research service. To learn more about Business Insider Intelligence, click here.

In the US, the in-store mobile wallet space is becoming increasingly crowded. Most customers have an option provided by their smartphone vendor, like Apple, Android, or Samsung Pay. But those are often supplemented by a myriad of options from other players, ranging from tech firms like PayPal, to banks and card issuers, to major retailers and restaurants.

With that proliferation of options, one would expect to see a surge in adoption. But that’s not the case — though Business Insider Intelligence projects that US in-store mobile payments volume will quintuple in the next five years, usage is consistently lagging below expectations, with estimates for 2019 falling far below what we expected just two years ago. 

As such, despite promising factors driving gains, including the normalization of NFC technology and improved incentive programs to encourage adoption and engagement, it’s important for wallet providers and groups trying to break into the space to address the problems still holding mobile wallets back. These issues include customer satisfaction with current payment methods, limited repeat purchasing, and consumer confusion stemming from fragmentation. But several wallets, like Apple Pay, Starbucks’ app, and Samsung Pay, are outperforming their peers, and by delving into why, firms can begin to develop best practices and see better results.

A new report from Business Insider Intelligence addresses how in-store mobile payments volume will grow through 2021, why that’s below past expectations, and what successful cases can teach other players in the space. It also issues actionable recommendations that various providers can take to improve their performance and better compete.

Here are some of the key takeaways:

  • US in-store mobile payments will advance steadily at a 40% compound annual growth rate (CAGR) to hit $128 billion in 2021. That’s suppressed by major headwinds, though — this is the second year running that Business Insider Intelligence has halved its projected growth rate.
  • To power ahead, US wallets should look at pockets of success. Banks, merchants, and tech providers could each benefit from implementing strategies that have worked for early leaders, including eliminating fragmentation, improving the purchase journey, and building repeat purchasing.
  • Building multiple layers of value is key to getting ahead. Adding value to the user experience and making wallets as simple and frictionless as possible are critical to encouraging adoption and keeping consumers engaged. 

In full, the report:

  • Sizes the US in-store mobile payments market and examines growth drivers.
  • Analyzes headwinds that have suppressed adoption.
  • Identifies three strategic changes providers can make to improve their results.
  • Evaluates pockets of success in the market.
  • Provides actionable insights that providers can implement to improve results.
Subscribe to an All-Access membership to Business Insider Intelligence and gain immediate access to: This report and more than 250 other expertly researched reports Access to all future reports and daily newsletters Forecasts of new and emerging technologies in your industry And more! Learn More

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Goldman Sachs is going through a huge transformation under new CEO David Solomon. Here's everything you need to know.

Mon, 06/17/2019 - 2:51pm  |  Clusterstock

Here's what we know about what's going on inside of Goldman right now, from its growing digital wealth business, to shakeups in its inner ranks. 

Consumer banking/wealth Technology Trading Alternatives Deals Careers 

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NOW WATCH: WATCH: The legendary economist who predicted the housing crisis says the US will win the trade war

After Elon Musk's tweets landed Tesla in hot water, an SEC heavyweight is looking to shore up the regulator's social-media rules (TSLA)

Mon, 06/17/2019 - 2:48pm  |  Clusterstock

  • An SEC commissioner last week urged new rules for how executives use Twitter and other social media. 
  • "It might be time for us to come forward and say, here are some principles of this game," Robert Jackson said, according to Bloomberg. 
  • Social media has been an acceptable venue for corporate announcements for years, following an SEC rule change.
  • However, it most recently caught Tesla CEO Elon Musk in hot water, which resulted in a lengthy court battle. 
  • Visit Business Insider's homepage for more stories.

In the wake of Tesla CEO Elon Musk's Twitter saga that resulted in a flurry of lawsuits, one of the Securities and Exchange Commission's four leaders is urging the stock market regulator to set new rules for C-suite social-media use.

"Without prejudging a particular matter, it might be time for us to come forward and say, here are some principles of this game," Robert Jackson, who was appointed to the SEC by President Donald Trump in 2018, said at an industry conference last week, according to Bloomberg.

The SEC did not respond to a request from Business Insider for Jackson's full comments, but the reported quote echoes a Jackson's May dissension, published shortly after the agency came to an agreement with Tesla and Musk about how to monitor the billionaire's Twitter use in order to avoid another failed go-private bid catalyzed by what turned out to be a lie. 

Read more: One SEC commissioner isn't happy about Elon Musk's deal with federal regulators over his Twitter use

"What's important to me is that the legal principles we've always had in the securities markets apply to all the innovative things that are happening," Jackson continued, per Bloomberg. "But Twitter is a little different. It's a medium; it's informal. It can be responsive, there can be retweets, there can be a conversation, in ways that are not contemplated by every single SEC rule."

Twitter has been a fair platform for corporate announcements for years, Bloomberg points out, ever since the agency in 2013 agreed with Netflix and its CEO Reed Hastings. Tweets can comply with Regulation FD — a seminal disclosure rule cited by the SEC in both instances — so long as investors are notified of the post in question, the agency said.

Musk, perhaps more than any other executive in the world, has embraced that very aspect of Twitter highlighted by Jackson. In recent months, even despite the amended agreement with regulators, Musk has continued to engage with his 27 million followers about everything from memes, to robots, AI, space, and more.

On Monday, however, Musk said he had "just deleted" his Twitter account. More than 12 hours later, that appeared to be a lie, as the account was still active.

Read more: Elon Musk got into a bizarre argument on Twitter after being called out for not crediting the artist behind a piece of video game fan art

SEE ALSO: Read more: Elon Musk got into a bizarre argument on Twitter after being called out for not crediting the artist behind a piece of video game fan art

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NOW WATCH: Now that Google and Nintendo offer digital video games, GameStop could have the same fate as Blockbuster

The developer of NYC's newest and most expensive neighborhood is pouring $8 billion into building the 'Hudson Yards of the West' in Silicon Valley

Mon, 06/17/2019 - 2:43pm  |  Clusterstock

In March 2019, NYC's newest neighborhood, Hudson Yards, was officially opened to the public. At $25 billion, it's the most expensive development in US history.

Now, Related Properties, the developer behind Hudson Yards, is heading west to create what Curbed has dubbed "The Hudson Yards of the West": An $8 billion mega-development in Silicon Valley, the first phases of which are expected to open in 2023.

Site work on the 240-acre Santa Clara project, which used to be a public golf course, began in May 2019, Bloomberg reported. The finished development will sit adjacent to Levi's Stadium — home to the San Francisco 49ers — and span a total of 9.2 million square feet. It will include 5.4 million square feet of office space, one million square feet of retail, dining, and entertainment space, 1,680 residential units, 700 hotel rooms, and a 30-acre park, according to its website.

In charge of the development's design is British architecture firm Foster + Partners, known for designing Apple stores and buildings around the world.

According to Curbed, Uber has also proposed building a skyport over the development which would transport residents and visitors to and from the location via aerial ridesharing.

Silicon Valley is home to one of the country's most competitive real-estate markets. An influx of tech workers over the past few years has caused one of the biggest price swells in San Francisco's history. With the average-priced home now costing more than $1 million, even fixer-uppers have sold for as much as $600,000. Wealthy homebuyers have been known to bid hundreds of thousands of dollars over the asking price, and, as Business Insider's Melia Robinson previously reported, 60% of tech workers in the area said they cannot afford a home in the area.

Manhattan's $25 billion neighborhood — Hudson Yards — is the most expensive real-estate development in US history. The project spans 18 million square feet across 28 acres. The mixed-use development includes well-known structures like the Shed, a 200,000-square-foot arts center, and the Vessel, a 150-foot tall, climbable sculpture that cost $200 million to build.

SEE ALSO: Hudson Yards is the most expensive real-estate development in US history. Here's what it's like inside the $25 billion neighborhood.

SEE ALSO: The billionaire cofounder of WhatsApp has reportedly spent $80 million assembling what may be the most expensive compound in America's richest town

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BLOCKCHAIN IN BANKING: An inside look at four banks' early blockchain successes and failures

Mon, 06/17/2019 - 2:01pm  |  Clusterstock

Since its emergence at the start of the decade, blockchain has been heralded as one of the most transformative technologies for financial services. Blockchain hype has led financial institutions (FIs) to pour money into the space and into distributed ledger technology more broadly: about $1.7 billion annually as of 2018, per research from Greenwich Associates cited by Bloomberg.

Despite the hype, sentiment around the technology has grown increasingly skeptical as FIs struggle to realize the value of their investments. Incumbents have shuttered some early experiments, and FI execs are beginning to discuss blockchain's prospects in bearish terms.

Key difficulties include scaling the technology for commercial application, ongoing regulatory uncertainty, and the difficulty of bringing together competing participants.

Yet amid the noise, it's becoming more clear where exactly blockchain has value, and some players are beginning to make genuine inroads in their adoption and deployment of the technology. Those who are finding success are both pushing back against souring industry sentiment and setting themselves up as industry leaders.

In The Blockchain in Banking Report, Business Insider Intelligence explores early blockchain successes and failures at four major banks, identifies the lessons these early wins — and losses — have for the rest of the financial services industry, and outlines actionable steps that industry players can take to ensure the success of their own blockchain projects.

The companies mentioned in this report are: Australia and New Zealand Banking Group (ANZ), Bank of America (BofA), Citi Bank, CME Group, Fidelity Investments, HSBC, IBM, JPMorgan, Marco Polo, Mastercard, Nasdaq, PayPal, Ripple, Royal Bank of Canada (RBC), Santander, SWIFT, and Visa.

Here are some of the key takeaways from the report:

  • Blockchain has been one of the most hyped technologies within financial services, heralded for its potential to eliminate pain points across the industry. 
  • Despite this enthusiasm, questions have come up about the technology's efficacy as FIs struggle to actualize blockchain solutions. Among the key challenges holding back blockchain adoption are scalability and performance, trust, and regulatory uncertainty.
  • Yet, for all its difficulties, blockchain's promise to transform financial services processes has meant leading banks are attempting to figure out where the technology does and does not work firsthand, to varying degrees of success.
  • To implement an effective blockchain solution, decision-makers should first determine how much they're willing to commit to the technology and identify a genuine business problem that blockchain can resolve. Only then should they develop a strategy for delivering a blockchain project.

In full, the report:

  • Details the key roadblocks holding backing blockchain adoption within financial services.
  • Identifies the most promising use cases are which industry players are coalescing.
  • Explores four banks' early blockchain project successes — JPMorgan and HSBC — and failures — Citi Bank and BofA — and the lessons they provide.
  • Provides actionable recommendations on how banks can successfully pursue a blockchain project.

Interested in getting the full report? Here are two ways to access it:

  1. Purchase & download the full report from our research store.  >> Purchase & Download Now
  2. Subscribe to a Premium pass to Business Insider Intelligence and gain immediate access to this report and more than 250 other expertly researched reports. As an added bonus, you'll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. >> Learn More Now

The choice is yours. But however you decide to acquire this report, you've given yourself a powerful advantage in your understanding of blockchain in banking.

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